India Supreme Court: Centre Proposes 30% Cancer Drug Trade Margin Cap

• The Centre informed the Supreme Court on October 12, 2026, that it will cap trade margins on a list of cancer drugs at 30%.
• This new cap, to be periodically updated, aims to prevent excessive markups on anti-cancer medicines while ensuring reasonable profits.
• The Supreme Court questioned why price controls were limited to oncology and called for broader scrutiny of drug pricing across the entire pharmaceutical market.
• The Court previously highlighted a cancer drug sold for ₹2,700 with an MRP of ₹27,000, noting it as a "clear cut case of fraud."
• Drug pricing in India is currently regulated under the Drugs (Prices Control) Order, 2013, enacted under the Essential Commodities Act, 1955.

The Supreme Court emphasized the necessity for a more expansive examination of drug pricing practices across the entire pharmaceutical market, asserting that the regulatory exercise should not conclude with anti-cancer medicines.

On October 12, 2026, the Centre informed the Supreme Court of India of its intention to implement a 30% trade margin cap on a designated list of cancer drugs. Solicitor General Tushar Mehta presented this commitment to a bench comprising Justices Vikram Nath and Sandeep Mehta, explaining that the measure aims to curb excessive markups on these vital medicines while still allowing for reasonable profits within the supply chain. The government indicated that this list of anti-cancer medicines would be dynamic, subject to periodic updates to incorporate new drugs based on market developments and evolving public health requirements. However, less expensive medications are expected to be excluded from this regulatory framework.

Despite the Centre's proposal, the Supreme Court did not consider it a comprehensive resolution to the ongoing petition, which addresses the sale of essential medicines at inflated prices. The Court pressed the government on why such price control initiatives were being confined solely to oncology products, questioning the absence of similar measures for other pharmaceutical categories. Furthermore, the justices challenged the rationale behind allowing manufacturers to set drug prices, asking how this benefits patients and seeking justification for elevated medicine costs. The Centre has yet to formally notify the specific list of drugs that will fall under this new 30% cancer drug margin cap.

Drug pricing in India operates under the regulatory framework established by the Drugs (Prices Control) Order, 2013, which derives its authority from the Essential Commodities Act, 1955. This order delineates two primary categories for drug pricing. For "scheduled formulations," which are medicines explicitly listed in the Order's First Schedule, the government sets ceiling prices that manufacturers must adhere to.

Conversely, for "non-scheduled formulations," pharmaceutical companies retain the autonomy to determine the initial launch price. In these instances, the Drugs (Prices Control) Order, 2013, primarily intervenes by restricting only the annual percentage increase in the maximum retail price, rather than dictating the base price itself. This distinction highlights the existing mechanisms for drug pricing and the areas where regulatory intervention, such as the proposed 30% cancer drug margin cap, can be introduced.

The Supreme Court emphasized the necessity for a more expansive examination of drug pricing practices across the entire pharmaceutical market, asserting that the regulatory exercise should not conclude with anti-cancer medicines. This call for broader scrutiny stems from prior observations made by the bench on September 22, where significant price disparities in essential cancer drugs were highlighted. During that earlier hearing, the Court noted an instance where a cancer drug sold to retailers for ₹2,700 was subsequently marked up to an MRP of ₹27,000, representing a tenfold increase.

Justice Sandeep Mehta, commenting on this discrepancy, questioned, "How can a patient be cheated?" and further remarked, "It’s Ultimately Taxpayers’ Money." The bench also pointed out that hospitals procure medicines at these inflated prices and then seek reimbursement from the government for patients treated under the AYUSH scheme, leading to what the justices described as "a clear cut case of fraud."

The ongoing case, titled Kishan Chand Jain v. Ethics and Medical Registration Board (EMRB), is scheduled for further hearing on October 27, indicating the Court's continued focus on addressing drug price regulation.

Pharmaceutical companies and their legal counsel in India must monitor the upcoming notification of cancer drugs subject to the 30% trade margin cap. This development signals increased regulatory scrutiny on drug pricing, potentially extending beyond oncology, requiring a review of current pricing strategies and compliance with the Drugs (Prices Control) Order, 2013.

Source: Original reporting via Supreme Court proceedings